(1) Notwithstanding the provisions of a retail installment contract to the contrary, the buyer may pay in full at any time before maturity the obligation contained in the retail installment contract. Upon the premature payment, the buyer shall receive a refund credit. The amount of the refund credit shall not be less than the total finance charge to maturity provided for in the contract, less the greater of:
(a) Ten percent of the amount financed or $75, whichever is less; or
(b) Either of the following, at the discretion of the motor vehicle dealer or holder:
(A) The finance charge earned to the date of prepayment, computed by applying the effective rate on the contract to the actual principal balances outstanding, for the periods of time such balances were actually outstanding. In determining the effective rate, the holder may apply to the scheduled payments the actuarial method by which each scheduled payment is applied first to the accrued and unpaid finance charges and any amount remaining is applied to the reduction of the principal balance.
(B) The finance charge earned to the installment due date nearest the date of prepayment, computed by applying the effective rate on the contract to the actual principal balances outstanding, for the periods of time the balances were actually outstanding. For purposes of rebate computations under this subparagraph, the installment due date preceding the date of prepayment shall be considered to be nearest if prepayment occurs 15 days or less after that installment date. If prepayment occurs more than 15 days after the preceding installment due date, the next succeeding installment due date shall be considered to be nearest to the date of prepayment. In determining the effective rate, the holder may apply to the scheduled payments the actuarial method, by which each scheduled payment is applied first to the accrued and unpaid finance charges and any amount remaining is applied to reduction of the principal balance.
(2) When the amount of the credit for premature payment is less than $2, no refund need be made.
(3) This section does not prohibit the holder of a retail installment contract from collecting any charge, cost or fee under ORS 83.590. [1957 c.625 §24; 1977 c.692 §1; 1981 c.910 §2; 1983 c.432 §2; 2001 c.117 §10]
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